Buy Tata Power Company Ltd For Target Rs 504 By Elara Capital
Resolution of Mundra, key monitorable
Tata Power’s (TPWR IN) Q3FY26 earnings were impacted by muted generation, with consolidated revenue declining 9% YoY to INR 139bn and EBITDA down 9% YoY, driven by a sharp 59% YoY fall in generation revenues, but partly offset by strong growth in renewables (+78% YoY) and steady T&D performance (+8.7% YoY). Reported PAT increased 1% YoY to INR 11.9bn. The key positive continues to be manufacturing and rooftop solar, where cell and module plants operated at industry-leading utilization, driving strong profitability growth, while the rooftop business scaled rapidly in both capacity and consumer additions. Maintain BUY with an unchanged SoTP-TP of INR 504.
Shutdown of Mundra plant weighs on earnings : Revenue declined 9% YoY and 10.3% QoQ to INR 139bn. Revenue from the generation declined 59% YoY to INR 20bn. Revenue from the renewable segment rose 78% YoY to INR 38bn. Revenue from transmission and distribution increased 8.7% YoY to INR 96.26bn. EBITDA declined 9% YoY and 7.5% QoQ to INR 31bn. Depreciation rose 16% YoY and 3.9% QoQ to INR 12bn. Interest increased 17% YoY and 3.4% QoQ to INR 13.6bn. Other income declined 20% YoY and 36.6% QoQ to INR 3.2bn. Regulated income stood at INR 5.4bn in Q3FY26 versus a loss of INR 2.7bn last year. Reported PAT increased 1% YoY to INR 11.9bn. PAT after adjusting for regulatory income from Delhi discom and Maithon plant and adjusting for income from Mundra in Q3FY25 declined 17% YoY to INR 5.8bn.
Solar cell and module manufacturing sustains high utilization: Manufacturing output was 962MW for cells and 990MW for modules in Q3, with industry leading utilization and yields. Capacity expansion in cell manufacturing enabled significantly higher output, supporting both internal projects and external demand. Solar rooftop added 1GWp capacity and 0.17mn new consumers in 9MFY26. Q3FY26 saw 58,476 installations and 372MWp capacity addition, taking the cumulative base beyond 0.3mn customers and 4GW+ installed capacity
Eyeing 10GW of ingot and wafer manufacturing capacity: TPWR’s total renewable capacity stood at 6.1GW, comprising 4.9GW of solar and 1.2GW of wind. It has executed 1.3GW renewable projects in Q3FY26. Total installed capacity stands at 16.3GW. Solar Cell and Module Manufacturing segment’s Q3FY26 PAT grew to INR 2.51bn, up 124 % (YoY). 9MFY26 PAT rose to INR 5.92bn, up 154% (YoY). In Q3FY26, rooftop PAT grew to INR 1.11bn, up 85 % (YoY). 9MFY26 PAT rose to INR 3.24bn, up 195% (YoY). TPWR plans to set up 10GW of ingot and wafer manufacturing facility. Backward integration into ingot and wafer ensures supply chain security and supports cost optimization
Maintain Buy with TP retained at INR 504: TWPR stands to benefit from power transmission capex, power distribution reforms and green investments. It aims to increase its RE capacity to 20GW by FY30 and has capex plans of INR 1.25tn for FY26-30. TPWR is implementing 2.8GW of PSP projects and has a sizeable opportunity in solar EPC. We maintain BUY with an unchanged SoTP-TP of INR 504. We have retained our earnings estimate.
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